Can the KOSPI Rise Back to 9,000? It Depends on This Company’s Earnings Report

[Financial News] Alphabet Inc.'s second-quarter earnings report, which could offer clues about whether U.S. big tech will continue investing in Artificial Intelligence (AI), is scheduled for early morning on the 23rd, Korea time. AI semiconductor stocks such as Samsung Electronics and SK hynix have recently come under pressure amid debate over AI monetization, but the report is expected to make advertising and Cloud growth, as well as the pace of capital expenditures (CAPEX) expansion, key variables. Kim Jae-seung, a researcher at Hyundai Motor Securities, said on the 22nd, "As debate over AI monetization has intensified and doubts have grown about the continuation of the AI investment cycle, stock prices have fallen, especially among memory semiconductors that had posted strong returns this year." He added, "Domestic investors are also paying close attention to Alphabet's earnings report."
He said the first thing to watch in this earnings release is the growth trend in the advertising business. Advertising, which includes Google Search, YouTube, and Google Network ads, is a core business that accounts for 73% of Alphabet's total revenue. If ad efficiency continues to improve through AI, concerns about financial strain from large-scale AI investments could ease.
Kim said, "Revenue growth in the core business can be interpreted as improved advertising efficiency through AI, and it can help ease concerns about a deterioration in the financial structure caused by large-scale CAPEX investment." He added, "The market is watching to see whether growth in the advertising segment will continue to accelerate."
The second point to watch is the growth of Google Cloud. As doubts grow over whether expanded AI investment can actually translate into profits, analysts say the Cloud business will be a key indicator of AI monetization.
Kim explained, "Growth in AI cloud services justifies hyperscaler CAPEX investment." He added, "To ease concerns over AI monetization, Cloud revenue must beat market expectations and show faster growth momentum than in the first quarter."
He also pointed to the CAPEX outlook as the final factor to watch. Because it is directly tied to demand for AI servers and HBM, an expansion in future investment plans could send a positive signal to the domestic semiconductor sector.
Kim said, "Alphabet has continued to expand CAPEX in line with market expectations since the fourth quarter of 2023." He added, "We should also watch whether the earnings release includes a trigger for an upward revision to the 2027 CAPEX outlook." He noted that some in the market expect Alphabet's 2027 CAPEX to rise to more than $300 billion.

[email protected] Han Young-joon Reporter